Lifetime ISAs guide

owenjt

Email from Skipton about making the most of my Lifetime ISA. Includes a question about whether I'll be transferring my Help to Buy into my LISA with a link to an online form. Is this Skipton assessing how many people want to transfer and maybe stop accepting transfers? If so, will they give notice?

System

They literally state that in the email ... But nothing about any notice

System

Just a thought regarding the penalties of withdrawing from a LISA (aside from the first year where there is no penalty...) it's pretty frustrating that you may lock £000's away into the LISA and not get granted a mortgage because of lower income for example or whatever criteria they base things on ... Bit of a risk to take with your funds with how mortgages are these days and how much you need to earn let alone have for a deposit let alone house prices !

eskbanker

NevvyC wrote: »

Just a thought regarding the penalties of withdrawing from a LISA (aside from the first year where there is no penalty...) it's pretty frustrating that you may lock £000's away into the LISA and not get granted a mortgage because of lower income for example or whatever criteria they base things on ... Bit of a risk to take with your funds with how mortgages are these days and how much you need to earn let alone have for a deposit let alone house prices !

I'd have thought that those on incomes deemed too low to support a mortgage would be unlikely to be stashing thousands into a savings product, or if they do then they'd be able to withstand getting 'only' 93.75% of their contributions back (plus interest or investment gains) if they decide to withdraw before 60, but you're right, it is a possibility....

System

I am one such person... Working part-time and unable to source a decent-enough paying full-time role currently

And I am extremely prudent with finances so this exactly increases my frustration - that I would never want to lose 6.25% of hard-fought earnings just because I couldn't be granted a mortgage

eskbanker

Fair enough - I'd assumed the question was more hypothetical but yes, I agree it's a bit of a gamble if you commit to a LISA when on a low income. Only you have sight of the figures involved but the potential win (+25%) heavily outweighs the potential loss (-6.25%) and, as above, there will be interest or investment gains to take into account as well, although obviously these would be available outside the LISA umbrella too. Do you think the LISA rules should be changed accommodate your situation and if so, how?

Dunkey

I think I may have made a mistake - to explain - I opened a LISA for my son with £4k only a couple of months ago in his name as he and his partner were looking at buying a property next year. As it turns out they have found a property now and want to proceed with purchase. However they need that £4k for deposit and I only realised yesterday when I received an email mail about the account that they can't touch it for 12 months unless they pay a penalty of around 6% - is this correct?? Have written to supplier but no response as yet - thanks in advance

eskbanker

Dunkey wrote: »

I think I may have made a mistake - to explain - I opened a LISA for my son with £4k only a couple of months ago in his name as he and his partner were looking at buying a property next year. As it turns out they have found a property now and want to proceed with purchase. However they need that £4k for deposit and I only realised yesterday when I received an email mail about the account that they can't touch it for 12 months unless they pay a penalty of around 6% - is this correct?? Have written to supplier but no response as yet - thanks in advance

No, during this tax year it's possible to get the funds out without waiting 12 months or being penalised, although obviously there's no bonus applied either so the holder will only get back what was paid in (plus a small pro rata interest payment for a Skipton cash LISA or any value changes if the money is in a S&S LISA).

This (2017/18-specific) scenario is covered in clause 9B.33b of the rules at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603261/ISA_Lifetime_ISA.pdf

snowqueen555

I suppose if your investments in the LISA go up 7% you would be able to withdraw without incurring any losses as it were.

I am currently waiting for HL to transfer my HSBC HTB into the LISA, I hope it goes okay, I am not sure how they would figure out my April 2017 figure but I will update you all on how it goes.

Alexland

True our Nutmeg LISAs are now at nearly £4150 each so that would cushion the penalty if we did have reason to unexpectedly withdraw some of the money before 60.